New South Wales Supreme Court CITATION : Deabel v V'Landys [2002] NSWSC 438 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 2057/02 HEARING DATE(S) : 20 May 2002 JUDGMENT DATE : 21 May 2002 PARTIES : Amanda Deabel (P) Peter V'Landys (D) JUDGMENT OF : Austin J COUNSEL : M Bateman (P) M Evans (D) SOLICITORS : Ashlars Lawyers (P) Swaab Attorneys (D) CATCHWORDS : REAL PROPERTY - caveats - caveat to protect alleged equitable interest based on financial contributions - whether plaintiff has arguable case on the evidence - application to amend caveat - whether Court has power LEGISLATION CITED : Real Property Act 1900 (NSW) ss 74F, 74L Baumgartner v Baumgartner (1987) 164 CLR 137 Depsun Pty Ltd v Tahore Holdings Pty Ltd (1990) ANZ Conv Rep 334 Jones v Baker [2002] NSWSC 89 CASES CITED : Kang v Kwan [2001] NSWSC 624 Mushinski v Dodds (1985) 160 CLR 583 Ryan v Dries [2002] NSWCA 3 The Marriage of Stevens (1991) 15 Fam LR 51 DECISION : Summons dismissed IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION AUSTIN J TUESDAY 21 MAY 2002 2057/02 AMANDA DEABEL v PETER V'LANDYS JUDGMENT 1 HIS HONOUR: By this proceeding the plaintiff seeks, as final relief, leave to amend a caveat which she has lodged against the title to the defendant's property at Woolwich, and an order extending the operation of the caveat until further order. I was informed from the bar table that the plaintiff contemplates commencing another proceeding seeking to vindicate the rights she alleges in the caveat, but that proceeding has not yet been commenced. 2 The plaintiff and the defendant had an intimate de facto sexual relationship for a period of time from about 1993 to 1997 or 1998, perhaps with a break during that period. The plaintiff says that during that time, she made indirect contributions to the acquisition of various properties in the name of the defendant, by contributing to mortgage repayments, household expenses and the purchase of chattels. She claims that she now has an equitable interest in a proportionate share of the defendant's property at Woolwich. Her counsel made it expressly clear, in answer to a question from me, that the plaintiff relies only on an equitable interest by way of trust, which counsel referred to as a constructive trust, and that she does not rely in the present proceeding on any statutory right, such as a right under the Property Relationship Act (although she may rely on that Act in her foreshadowed proceeding against the defendant). 3 In Schedule 1 of the caveat that she lodged on about 22 February 2002, under the heading "Estate or interest claimed" and the subheading "By virtue of the facts stated below", the following appears: "The caveator contributed significantly to the mortgage repayments of various previous property's bought and sold by the registered proprietor the proceeds of which contributed substantially to the registered proprietor being able to purchase the land described above [sic]." 4 The defendant submitted that the instrument of caveat was manifestly defective in form. Schedule 1 of the document was incomplete. Nothing was stated under the heading "Nature of the estate or interest in the land" in Schedule 1. According to the defendant, the caveat failed to satisfy s 74F (5) (b) (v), which requires that the caveat contain "the prescribed particulars of the legal or equitable estate or interest, or the right arising out of the restrictive covenant, to which the caveator claims to be entitled". 5 In my opinion, the caveat was not rendered defective simply because the information about the estate or interest claimed appeared only under the heading "By virtue of the facts stated below", and the box under the heading "Nature of the estate or interest in the land" was left blank. Her statement under the latter heading may be treated as a purported statement of the nature of the interest that she claimed. The question is whether that statement was sufficiently specific to identify an estate or interest recognised by law. Her statement communicated that she wished to rely on her contributions to mortgage repayments to give her an interest in the land. In my view, it is a reasonable inference that she wished to invoke the law of resulting (and perhaps constructive) trusts, as propounded in such cases as Mushinski v Dodds (1985) 160 CLR 583 and Baumgartner v Baumgartner (1987) 164 CLR 137, to the extent that those cases allow an equitable proprietary interest to arise out of indirect contributions to the acquisition of property through the payment of mortgage instalments of capital and interest. The statement was restricted to contributions to mortgage repayments. 6 The plaintiff wishes to amend the caveat by inserting under the heading "nature of the estate or interest in the land", the words "beneficial interest in the land held by the registered proprietor, as trustee, for the caveator in a share proportionate to the caveator's contribution to the acquisition of the land". Under the heading "By virtue of the facts stated below" she wishes to substitute the following: "During an intimate and sexual relationship between the registered proprietor and the caveator, inter alia, improvements to and loan payments for real property were paid by the caveator. Proceeds of sale of the real property contributed substantially to the registered proprietor's interest in the land described above." 7 The power of the Court to grant leave to a caveator to amend a caveat is not beyond doubt. In Depsun Pty Ltd v Tahore Holdings Pty Ltd (1990) ANZ Conv Rep 334 McLelland J doubted whether there was a power to allow amendment of the estate claimed in a caveat. However, in The Marriage of Stevens (1991) 15 Fam LR 51, at 52-53, Cohen J expressed the view that the power to extend a caveat may permit the court to overcome deficiencies in the expression of the interest claimed. These cases were referred to by Santow J in Kang v Kwan [2001] NSWSC 624 (13 July 2001), but his Honour found it unnecessary to resolve the issue because he concluded that the plaintiff had failed at the threshold to establish a caveatable interest. 8 It is arguable that an amendment is unnecessary having regard to s 74L, which requires the Court to disregard any failure of the caveator to comply strictly with the statutory requirements with respect to the form of the caveat. As Young CJ in Eq said in Jones v Baker [2002] NSWSC 89 (12 February 2002) at paragraph 32, the Court usually exercises its power in light of s 74L so as to give effect to the caveat if the caveator has a caveatable interest, despite "even gross defects such as the failure to state the interest being protected or even the failure to state the maximum amount secured by the charge". 9 I am in the same position as Santow J in Kang v Kwan. In view of the conclusion I have reached regarding the plaintiff's claimed caveatable interest, I do not have to decide whether the Court has the power to grant leave to the caveator to amend a caveat, or whether any amendment is necessary in light of s 74L. I am content to assume, for the purposes of this judgment, that the Court has the power to authorise amendment of a caveat in the manner proposed by the plaintiff, if it is necessary. The real question is whether the plaintiff has an arguable case that she has any caveatable interest at all. I have reached the conclusion that she has not established such a case. 10 When an application is made for extension of a caveat, the Court regards the caveator as analogous to an applicant for an interlocutory injunction: see Peter Butt, Land Law (4th ed, Lawbook Co, 2001), paragraph 2033 and cases there cited. The first requirement is that the caveator must establish that there is a serious question to be tried, that is, an arguable case. It is not enough to show an arguable case on the pleadings, as it were. It must appear to the Court that there is an evidentiary basis for the plaintiff's contentions. But once that is established, it is not necessary or appropriate, in proceedings for extension of a caveat, for the Court to determine on a final basis whether the caveator has made out the estate or interest in land upon which the caveat rests. 11 The only evidence adduced by the plaintiff was her own affidavit, annexing a copy of the caveat, and her oral evidence. She also relied on an affidavit by a law clerk employed by her solicitor, but it goes only to explaining some delay in the making of the application to extend the caveat. She tendered no documents, and produced no witnesses to corroborate her evidence. She did not cross-examine the defendant on his affidavit. Her credibility was essential to her case, given that the defendant denied her evidence on every crucial point. Unfortunately for her, I formed a very unfavourable impression of her evidence after observing her in the witness box, and I have concluded that I cannot rely on it on any contested point. I shall set out my grounds for reaching this view. 12 First, the plaintiff said she continued living with the defendant after 25 January 1997 and up to November 1997. However, accounts for the telephone service to the Abbotsford residence where the parties were living in 1996/97 show a clear pattern of frequent calls from that telephone to the telephone number of the plaintiff's mother and to the defendant's mobile telephone number up to 25 January 1997, abruptly ceasing at that time. The plaintiff admitted that the telephone calls to her mother's number, and most of the telephone calls from the residence to the defendant's mobile telephone number, were made by her. She said that she stopped using the telephone at the residence on about 25 January, thereafter ringing her mother on her mobile telephone and not calling the defendant on his mobile telephone. But she provided no documentary support for this assertion, nor any explanation for why she should suddenly change her practice. I find her explanation implausible. 13 Secondly, in her oral evidence the plaintiff gave a detailed account of the occasion of her departure from the Abbotsford residence, which according to her evidence took place in November 1997. She recollected an emotional discussion in the bedroom and when pressed, asserted several times that this event occurred in November 1997. However, the documentary evidence tendered by the defendant included a residential tenancy agreement which shows that from late October 1997 the defendant took a tenancy of a property in Chiswick. When confronted with that evidence, all the plaintiff could say was that her account had been to the best of her recollection, and she has given evidence of what she believed. It seems to me unlikely that her evidence on these matters was simply the result of a faulty recollection. It is more likely that she claimed that cohabitation continued until November 1997 in order to enhance her prospects in her foreshadowed proceeding under the Property Relationship Act. 14 Thirdly, the plaintiff's affidavit evidence was that in late December 1994, while she and the defendant were on holiday in Las Vegas, the defendant asked her to marry him in an "Elvis" chapel. She said she refused his offer. She said he again asked her to marry him early in June 1996, and again she refused his offer. In her oral evidence she gave a rather different account. She said that she and the defendant agreed to marry during their trip to the United States, but that she changed her mind because she did not wish to marry in an "Elvis" chapel and would prefer to marry when they returned home. She also said that the defendant had given her an engagement ring in December 1993, but when asked where the ring was she said she had "hocked" it. If there had been an agreement to marry, and she had received an engagement ring, these would have been important matters to be dealt with in her affidavit. Their omission from the affidavit leads me to disbelieve her oral evidence on these matters, and also to disbelieve her affidavit evidence that the defendant ever asked her to marry him. 15 Fourthly, the plaintiff gave evidence in her affidavit and orally that she had a conversation with the defendant in February 1998, after which he took her to see the Woolwich property, which was for sale by auction. She said she told him he would be a fool not to buy it. However, the documentary evidence shows that the Woolwich property was transferred to the defendant in December 1997, and the defendant's evidence is that he bought it at an auction in November 1997. I agree with the submission by counsel for the plaintiff that a discrepancy between November 1997 and February 1998 could be explained by reference to faulty recollection if it were considered in isolation. However, I must assess the evidence in its context and upon the basis of my observation of the witness. It seems to me unlikely that the conversation of which the plaintiff gave evidence occurred in February 1998 or at all. 16 Fifthly, the defendant gave evidence that in about April 2000 he received a telephone call from the plaintiff during which she asked him for financial help, and he said he gave her some help. In her oral evidence, the plaintiff agreed that such a conversation had occurred, although she did not agree with the defendant's version of it. She said that she had accumulated a very large credit card debt while living with the defendant, and her financial difficulty in April 2000 was the consequence of having accumulated that debt. However, she gave evidence that she took a trip to Europe for about six weeks in June 1998 and paid for the trip on her credit card. It seems to me unlikely that the financial difficulty she experienced with her credit card debt in April 2000 was as a consequence of the debts incurred by her while living with the defendant, given that their cohabitation ended in November 1997 on her account, and in January 1997 on his. 17 Sixthly, the plaintiff's evidence of financial contributions was that, at the defendant's request, she paid him $170 every week in cash while they were living together, and she also followed the practice of paying him in cash for half of their expenses, such as telephone, electricity and food expenses, and that she paid half of the cost of items purchased for their residence. I find her evidence implausible and I reject it. She produced no bank records or other documentary evidence to show withdrawals of cash for payment. The defendant's documentary evidence included receipts for relatively large payments for such items as light fittings and a hot water service for the Drummoyne home unit. When the plaintiff's attention was drawn to these matters in the witness box, she maintained that she had paid the defendant half of the cash purchase price for those items, saying that on one occasion where a substantial amount of cash was involved she withdrew the money from an automatic teller machine. It would have been a relatively simple matter for her to produce bank records to demonstrate that she had done so. 18 The documentary evidence tendered by the defendant shows that the total rental for the premises at Drummoyne where they were living for a time was $280 per week, and so on her evidence she agreed to pay substantially more than half of the rent for that accommodation. The documentary evidence also shows that the defendant's employer contributed $250 per week towards that rent, and paid fringe benefits tax on those payments. 19 The evidence as to her salary is that until April 1994 the plaintiff earned only approximately $20,000 per annum, and thereafter she worked for Ernst & Young for six years. Her salary in 1994 was about $24,000 per annum and in 1995 it rose to about $35,000 per annum, eventually (according to her evidence, which is unreliable) rising to about $45,000 per annum. She bought a car in March 1994 for about $20,000. I find it implausible that she could have afforded to pay, out of this income, $170 per week throughout the period of their cohabitation, and also half of the expenses and the cost of items purchased for the residence. She said she received tips and cash payments while working for one of the employers, and that she accumulated credit card debts, but there is no corroboration for this evidence and I reject it as an explanation of the source of funds to make the payments she claims to have made. 20 My conclusion as to the plaintiff's credibility, and my findings on the matters set out above, have led me to the view that the plaintiff has not made out an arguable case to support her claimed equitable interest. I do not find that the defendant's evidence is correct in every respect, as it has not been tested, but only that the plaintiff has not made out her case. I shall review the evidence concerning their relationship and financial contributions in light of my conclusion as to the plaintiff's credibility. 21 The plaintiff's evidence was that she first had sex with the defendant in about July 1993. She said she began to live with him in August 1993. The defendant said he commenced dating the plaintiff in August 1993, and did not deny her assertion that their sexual relationship commenced at about that time. He said he commenced living with her in December 1993. 22 The plaintiff gave an account of a conversation between her and the defendant in August 1993 at his property in West Wollongong, claiming that he said to her "one day this house will be yours". He denied ever having said so. 23 The defendant said that when they began living together, they lived in premises at Glebe, provided to him by his employer on a rent free basis. However, they moved to premises in Victoria Place Drummoyne in about December 1993. He paid the bond for those premises and contributed $30 per week towards the rent, the balance being paid by his employer. He said he paid all the utilities such as telephone and electricity expenses, and that between December 1993 and March 1994 the plaintiff paid no more than $30 per week, although not every week, towards her expenses, an amount that did not cover all of her expenses. I note that there is no suggestion in his evidence that her payments were referrable to any arrangement by which she would contribute expenses so as to leave him free to save a deposit for the purchase of a residence. 24 In March 1994 the plaintiff purchased a home unit in Drummoyne Ave Drummoyne for $283,000 plus stamp duty of $8399. He paid for the property by using his inheritance from his father and savings, borrowing $279,000 from the Commonwealth Bank by way of mortgage. His employer met the mortgage repayments on his behalf and paid fringe benefits tax in relation to those payments. In May 1994 he carried out renovations to the Drummoyne unit, for which he paid, according to his evidence. He said the plaintiff never contributed towards the purchase of furniture or other household items, with the exception of a quilt and quilt cover. He denied that the plaintiff made any contributions towards mortgage payments or the cost of renovations. He said he paid all Council and water rates, body corporate fees, telephone and electricity expenses. He said the plaintiff intermittently contributed an amount of up to $50 per week, although not every week, which was notionally applied towards the cost of maintaining her, but her contributions did not cover the whole of her living expenses. The defendant denied the plaintiff's evidence that he told her that her contributions were going towards the mortgage repayments. 25 The plaintiff claims to have carried out renovations, including removing wallpaper and internal painting, creating a garden and replacing some flooring. It seems to me that the work she described in her affidavit and in cross-examination was more in the nature of maintenance than value-adding improvements. She explained that replacement of the flooring amounted to pulling up some carpet and its attachments. 26 The defendant's evidence is that in about January 1995 the parties separated and the plaintiff moved into her father's home unit, where she remained for about five months. However, in June 1995 the parties were reconciled and she moved in with him again at the Drummoyne Ave unit. He says that during the ensuing three months the plaintiff made no contributions towards the living expenses. 27 In September 1995 the plaintiff sold the Drummoyne unit for $325,000. The parties moved into rented premises at Raglan Street Drummoyne for a period of six months. The plaintiff said he solely paid the rent and bond, electricity and telephone accounts. He said the plaintiff intermittently contributed $50 per week, although not every week. 28 In June 1996 the plaintiff purchased a home unit in Abbotsford for $315,000 and paid stamp duty of $9665. He borrowed from a home lender on mortgage security. He said he paid all Council and water rates, body corporate fees, electricity and telephone expenses. According to the defendant's evidence, the plaintiff and he separated on 25 January 1997. He sold the Abbotsford property in October 1997 for $360,000 and moved into rented premises at Chiswick. He bought the Woolwich properly for $560,000 at an auction in November 1997, providing $45,000 from his savings and borrowing the balance on mortgage security. He demolished the dwelling on the property and built a new home, at a cost of $600,000, which he borrowed. 29 The plaintiff gave evidence that in the period from February 1998 to September 1998 she spent weekends purchasing house fittings, and that the defendant relied on her judgment and choice. The defendant denied that this occurred, pointing out that the plaintiff was overseas for part of 1998. According to the plaintiff, she ceased having sex with the defendant in November 1998. The defendant denied having any sexual relations with her after January 1997. 30 The plaintiff gave evidence of a conversation in mid-March 1999 between her and the defendant, in the presence of her sister. She said the defendant said he would be a millionaire once his house was sold and that he would give her $30,000 out of the proceeds to put towards a deposit for a unit for herself. She said they shook hands on the arrangement. The defendant denied this conversation. The plaintiff's sister did not give evidence. 31 Clearly the relationship between the parties is now quite bitter, and has been so for some time. On 14 March 2001 the plaintiff came to the Woolwich residence and after certain events occurred, the police charged her with assault and malicious damage. On 11 April 2001 an apprehended violence order was made against her. Counsel for the plaintiff stated that those proceedings have not been concluded and that there are still matters in issue between the parties. 32 Since the plaintiff's own evidence is not reliable, and she has not taken any steps to corroborate it by other witnesses or documents, my view is that she has not made out even an arguable case for an equitable interest in the Woolwich property based upon any financial or other contributions to the property during the course of her relationship with the defendant. Wherever her evidence is inconsistent with the defendant's evidence in the above account, she has given me no basis to prefer her version of events to his. 33 The defendant accepts that the plaintiff made irregular small financial contributions while they were living together, and counsel for the plaintiff submitted that this amounted to an admission that an equitable interest had arisen, the parties differing only as to quantum. Counsel submitted, after tracing through the financial history of purchases and sales of property, that the plaintiff's contributions would give her at least a 35 or 36 percent interest in the Woolwich property. I disagree. The mere making of financial contributions towards one's own expenses while living with another does not provide any basis for the assertion of an equitable interest in the property owned by the other. There is nothing in the defendant's evidence to indicate any arrangement between the parties that the plaintiff's contributions would enable the defendant to save a deposit and then, later, to make mortgage repayments. Nor does his evidence provide any basis for the assertion of an equitable interest arising out of improvements to property or any acquiescence or estoppel. 34 My conclusion, therefore, is that there is no proper ground for an order extending the caveat, and it is unnecessary for me to consider the amendment of the caveat. Nor is it necessary for me to consider the defendant's claim, based upon Ryan v Dries [2002] NSWCA 3 (6 February 2002), that as part of any equitable accounting in favour of the plaintiff she should be required to do equity by making some appropriate adjustment in respect of her occupation and use of the defendant's property. 35 The defendant also relied on delay by the plaintiff in bringing her claim, and on abuse of process. As to delay, there is some evidence that the parties remained in contact after cohabitation ceased, as the plaintiff requested financial assistance. Additionally, the plaintiff has given oral evidence that he was seriously injured by a motor car and that has interfered with her preparation of her case. In all circumstances, I do not regard the plaintiff as precluded by laches or other delay from bringing the present proceeding. As to abuse of process, the case has not been made out, on the basis of the material admitted into evidence. The defendant sought to adduce evidence of other matters but, to the extent that they were relevant, I rejected the evidence of those matters on discretionary grounds. 36 I shall dismiss the summons and hear the parties on the question of costs. ********** Last Modified: 06/28/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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